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23 Sept 2019: The Hindu Editorial Analysis

1) On linking Aadhaar-GST registration

  • Ever since the Centre and the States passed the landmark legislation in 2016 adopting a single countrywide Goods and Services Tax (GST), the federal council that is tasked with overseeing all the regulatory aspects of the indirect tax has had its hands full.
  • From recommending the rates that could apply to various products and services, to deciding on what could be tax exempted, the GST Council has had the heavy task of laying out the policy framework for administering the tax in a manner that benefits all stakeholders - the governments, the consumers and the suppliers along the value chain.
  • Given the complexity of the legacy taxes that GST included and replaced and the teething troubles of operating a new tax system, ensuring optimal outcomes has proved an abiding challenge.
  • A significant concern relates to the loopholes that dishonest operators have sought to exploit, whereby revenue that ought to have increased to the Centre and the States has leaked while allowing these elements to derive illegal profits.
  • And the scale of some has been breathtaking. Earlier this month, the Directorate General of GST Intelligence and the Directorate General of Revenue Intelligence conducted a pan-India joint operation, which saw about 1,200 officers simultaneously conducting searches at 336 different locations.
  • In the process they unearthed a network of exporters and their suppliers who had connived to claim fraudulent refunds of Integrated GST, with more than ₹470 crore of input tax credit availed being based on non-existent entities or suppliers with fictitious addresses. A further ₹450 crore of IGST refund is also under review.

  • It is against the backdrop of such cases, and the fact that frauds totalling up to a staggering ₹45,682 crore have been detected since the roll-out of the tax in July 2017, that the GST Council has decided “in principle” to recommend linking Aadhaar with registration of taxpayers.
  • In its 37th meeting in Goa on Friday, the council also agreed to appraise the possibility of making the biometrics-based unique identifier mandatory for claiming refunds.
  • Already the GST Network - the information technology backbone on which the whole tax system runs - has made it mandatory for new dealers registering under the composition scheme for small businesses to either authenticate their Aadhaar or submit to physical verification of their business, starting January 2020.
  • The council too needs to follow the network’s lead and move swiftly to recommend mandatory linking for refunds, especially since that has proved to be the main source of most frauds.
  • The move to link Aadhaar with GST registration is a tentative step in the right direction. In a becalmed economy, neither the Centre nor States can afford to forego even a rupee of revenue that is due to the public coffers.


2) On Climate Change: A political disconnect

  • Today’s global Climate Action Summit, convened and energetically backed by the United Nations Secretary General, seeks to pull off just this feat. It seeks to spur national pledges and action to address climate change in the face of mounting information that the community of nations is doing too little, and too late.
  • The summit occurs amid a steady drumroll of scientific alarm. The scientific advisory group to the summit, reports that the five years since 2015 is set to be the warmest of any equivalent recorded period, sea level rise is accelerating, and oceans have become 26% more acidic since the dawn of the Industrial era.
  • Recent weather events bring into focus the likely implications of a warming world. This summer saw Delhi-like temperatures across southern Europe; Hurricane Dorian rendered large parts of the Bahamas unliveable; and witnessed simultaneous raging fires in the Amazon, central Africa and even Siberia.
  • Scientists are increasingly able to link these individual events with climate change - the heat wave in France and Germany was made eight to 10 times more likely by climate change. Yet, concentrations of carbon dioxide continue to rise, and current country pledges would not stem this increase even by 2030.
  • The growing evidence of climate change - scientific and experiential - has spurred an upwelling of social action, notably among the youth. While more noticeable in the global North, young people are also mobilising in India and other countries in the global South, with The New York Times reporting that organisers estimate four million youth turned out in protest (on Friday) against inaction on climate change around the world.
  • If science, experience and public alarm are increasingly on the side of action, unfortunately, national politics in country after country is trending in the wrong direction.
  • A turn toward nationalism in multiple countries has created a short-term, look-out-for-our-own mentality that is inimical to the global collective action needed to address climate change.
  • Thus, in the United States, President Donald Trump not only refuses to enhance actions, he has actively rolled back measures in the electricity sector and actions to limit methane emissions in the name of competitiveness.
  • In Brazil, President Jair Bolsonaro has made it clear he sees environmental protections as limiting Brazilian business. And nationalism in some countries makes it much harder to pursue aggressive action even in countries where the politics is more conducive.
  • Backed by popular mobilisation and scientific evidence, can the UN Summit swing the tide toward enhanced action? The Secretary-General is pinning hopes on a two-track approach.
  • First, in an exercise of diplomatic pressure, countries have been urged to enhance their pledges for action made as part of the Paris Agreement, committing to lower future emissions. The intention is to provide a platform for climate champions to step up and claim leadership of an important global agenda.
  • So far, the response is underwhelming. A number of small and mid-sized countries, including the United Kingdom, have already committed to achieving the objective of making their economies net carbon neutral by 2050 (that is, the sum of emissions and uptake of carbon through ‘sinks’ such as forests is zero).
  • By contrast, several large countries, notably the United States, Brazil, Australia, Canada, Japan and Mexico etc. are reportedly not even going to participate in the event at a high level.
  • China and India have issued statements hinting that they are doing quite enough, and India has highlighted the need for enhanced finance if it is to do more.
  • While there may be last minute surprises, the UN Summit does not look like shifting any entrenched positions - those willing to act are known, and those unwilling are unmoved. International suasion, even backed by science and popular mobilisation, seems unlikely to shift entrenched national politics.
  • The second track operates less in the realm of diplomacy and seeks instead to induce changes in real economies around a set of ‘action portfolios’.
  • These include, for example, furthering and accelerating an energy transition toward low-carbon energy, making cities more climate friendly and more resilient to climate disruption, and starting the process of turning energy intensive sectors such as steel and cement more carbon friendly.
  • Notably, domestic objectives are central to these conversations: promoting solar energy for energy security reasons; making cities more liveable; and making industries more efficient and therefore competitive.
  • These initiatives serve as a focal point for broader conversations including coalitions of business and researchers. If the UN Summit is to result in enhanced action, this may well be the more fruitful track.
  • A path for India: First, we are a deeply vulnerable country to climate impacts. It would be heaving India not to be a status quo player in this context, but to argue for enhanced global collective action.
  • Second, India has the potential to show the pathway to accelerating action on climate change even while pursuing its development interests. A notable example is its energy efficiency track record, which helps limit greenhouse gases even while saving the nation energy.
  • However, there are inconsistencies in India’s story as a climate champion. India is justifiably recognised for promoting renewable energy, yet also muddies the waters by sending mixed signals on future coal use.
  • The choice of Houston - the U.S. oil capital - for the Indian Prime Minister’s recent public event, risks signalling that India sees its energy independence as tied to enhanced fossil fuel use.
  • While some increase in fossil fuel is inevitable for India, the messaging is incoherent at best. India needs domestic energy policies that are more clearly and coherently tuned to a future low carbon world.
  • Third, such a domestic message would position India to be a true global climate leader, rather than a leader only among climate laggards. Could an India, firmly committed to a low-carbon future that brings development benefits, strike common cause with other powers?
  • India and China, both jostling for influence in African nations but also both losers from climate impacts, jointly help ensure that Africa’s development is powered by renewable energy rather than fossil fuels and based on an energy efficient future? Such an agenda could bring together economic, environmental and political gains.
  • The UN Summit is likely to teach us hard lessons about climate politics in an era of nationalism. The pathway to enhanced action is unlikely to override entrenched national politics, powered by international suasion.
  • Instead, the aim should be to make accelerated climate action congruent with an enlightened notion of national interest by focusing on key actions in rapidly changing areas such as energy and urbanisation.
  • Such a pathway holds enticing prospects for India. But it requires that India can build a diplomatic approach on a firm domestic foundation that takes climate change, seriously as a factor in its future development pathway.